Facebook Libra menace le contrôle de l’Euro par la BCE

Another ECB board member has spoken of the danger of digital assets to create pressures on official monetary policy.

Yves Mersch, board member of the European Central Bank (ECB), commented that Facebook’s Libra could pose danger for the European monetary policy, reported Reuters. The ECB has a mandate to look over the liquidity and steer the pace of the Eurozone economy through its interest rate and liquidity interventions. A large-scale digital asset could create an informal economy that is outside the control of the ECB, commented Mersch.

“Depending on Libra’s level of acceptance and on the referencing of the euro in its reserve basket, it could reduce the ECB’s control over the euro, impair the monetary policy transmission mechanism by affecting the liquidity position of euro area banks, and undermine the single currency’s international role,” Mersch said.

Mersch is also concerned that the Libra currency would not be salvageable by “a lender of last resort”, since there is no central bank for digital assets. Libra would be backed by a basket of fiat currencies, at least in theory, held in the accounts of specially assigned exchangers. But there is no telling what risks may be related to a fluctuating exchange rate.

The ECB has been generally favorable to fintech solutions operating in fiat, but the Libra project has gained extreme criticism for the need to create a new asset. In the past, ECB sources have spoken against using a digital token in the place of fiat, as in the case of Estonia’s Estcoin.

“I sincerely hope that the people of Europe will not be tempted to leave behind the safety and soundness of established payment solutions and channels in favor of the beguiling but treacherous promises of Facebook’s siren call,” Mersch said.

Facebook’s Libra is still a hypothetical asset, running only through testnet. So far, established tech companies have steered away from direct involvement with digital coins, despite adopting partial blockchain solutions. This fall, the TON token by Telegram is expecting its launch, and also faces potential regulatory scrutiny due to Telegram’s involvement with crypto-based fundraising for terrorism activities.